Tauranga trust picks three for $150m growth mandate

After a more than five-month due diligence process the Tauranga Energy Consumer Trust (TECT) has farmed out almost $150 million among three fund managers.

Wayne Werder, TECT general manager, said the trust – which raised the money after selling down about 20 per cent of its shareholding in Trustpower this April – had gone for an “entirely growth” approach to asset allocation.

In May Bill Holland, TECT chairman, told Investment News NZ (IN NZ) while it was open to all ideas, the trust would probably invest in a diversified mix of assets.

Werder said TECT opted for total-growth approach after consultation with investment adviser, Ed Schuck. Head of Russell Investments NZ from 2000-2008, Schuck now runs his own consultancy firm, Fidato Advisory.

Following a ‘beauty parade’, TECT selected Vanguard for international shares, Devon Funds Management in Australasian equities and Mercer to manage property/infrastructure.

“For global shares we’ve decided on a passive approach,” Werder said.

TECT will invest directly in the underlying funds rather than via an implemented solution.

“The board worked through all the options,” he said.

While most of the TECT funds would be fully invested by December, Werder said the board had also set aside about 5 per cent of the $150 million to place in private equity projects.

“There’s been no decision yet about the private equity investments,” he said.

Prior to the April sell-down, which realised over $150 million, TECT held virtually all of its assets in Trustpower shares. TECT’s stake in Trustpower dropped from over 33 per cent to almost 27 per cent following the sale.

Holland told IN NZ earlier this year TECT needed to maintain at least a 26 per cent share of Trustpower to ensure the firm’s constitution remains unaltered.

TECT pays out an average annual dividend of about $450 to western Bay of Plenty (BOP) power consumers and $8-10 million in donations to local community projects each year.